American Headlines September 29

Congressional leaders and the Bush administration announced Sunday they had reached a draft deal to commit up to $700 billion to bail out struggling Wall Street firms plagued with assets-backed securities, The Washington Post reports. House and Senate negotiators reached an agreement that will allow Treasury Secretary Henry Paulson Jr. to stage one of the biggest government interventions since the Great Depression. House Speaker Nancy Pelosi (D-Calif.) has ensured that the draft will be available to the public for at least 24 hours before the House votes on it, which could happen as early as Monday.

The plan would see funds dispersed in stages, with Paulson getting $250 billion to start, another $100 billion if the White House deems it necessity and the remaining $350 billion after Congress has 15 days to review matters. Firms receiving aid would have to give the government rights to buy nonvoting shares of stock at a certain price, with equity appreciation being kicked back to taxpayers. Companies that receive $300 million or more will have compensation caps for senior executives, likely set through the tax code by cutting tax deductions for firms that pay top five executives more than $500,000 annually. If the government does not get its money back within five years, the president will be able to set a fee for the financial services industry to pay. The deal would also see the Treasury Department start a federal insurance program funded by capital from the banks. Finally, both political parties agreed to an oversight plan that would include an independent Inspector General and an oversight board selected by both parties. The plan would also allow the government to buy assets from pension plans, local governments and small banks.

The state of Florida will receive $541 million in new federal foreclosure funds to prevent more loan defaults, the Miami Herald reports, citing U.S. Housing and Urban Development Secretary Steve Preston. The community development block grants must be used to acquire real estate, rehabilitate abandoned homes and offer low-to-middle-income homebuyers help with down payments. Local and state government can also use funds to start land banks to buy, manage and sell distressed property. The money comes from a housing and economic recovery package President Bush approved in July. As of June 30, Florida had the highest percentage of foreclosures in the U.S.

In November, Massachusetts residents will decide on the fate of state income tax per Question 1,The New York Times reports. The repeal would save the average taxpayer roughly $3,600 annually, but would cost the state $12.5 billion, about 45% of the state budget. Massachusetts Secretary of Administration and Finance Leslie Kirwan said passing Question 1 could result in program cuts of up to 60%. Gov. Deval Patrick is against the proposal as well. Budget cuts might include schools, police, municipal services and snow plowing.

This follows a 2000 income tax cut from 5.75% to 5%, which was frozen at 5.3% in 2002, when a ballot measure on abolishing state income tax was surprisingly well received. If passed, Question 1 would slash the tax by 50% in the first year and cut it completely by the second year. The move might require cutting government spending, including employee pensions.

Developers of a massive multi-use project in Miami are funding a campaign to gain rights to build a casino in the south Florida city, The Miami Herald reports. Marc Roberts and Art Falcone, the developers behind the 25-acre Miami Worldcenter, are financing a political committee that has spent upwards of $850,000, hired 13 petition-gathering companies and hired lawyers to write an initiative for placement on the 2010 ballot. Part of the legalese promises money for all Florida schools. The three amendments being considering would ask voters to grant a lower tax rate and rights to run the same games as the Seminole Tribe. Class III gambling includes craps, keno, roulette, blackjack and slot machines that would be allowed in Miami Dade or Broward, and at a Miami Beach hotel with more than 800 rooms.

Roberts’ spokesman Michael Caputo said it could cost $100 million to get 60% of the vote, and added that the committee has tapped ex-Miami Mayor Maurice Ferre to determine how the project could create more jobs for the community. Incumbent Miami Mayor Manny Diaz has worked with Falcone’s team of advisors and is not against a casino, but clarified that he is in favor targeting high-end customers, not residents possibly spending their retirement or social security.